- 2024-07-31T00:00:00
- Company Research
- PC1 released its Q2 2024 results with revenue of VND3.1tn (+110% YoY) and reported NPAT-MI of VND62bn vs a loss of VND13bn in Q2 2023. Outstanding growth in revenue is primarily due to (1) 120%/206% YoY growth in revenue from the power construction and electric steel pole manufacturing segments, which mainly come from the 500kv line 3 construction, (2) a new contribution of revenue from nickel mining business with VND338bn in Q2 2024 vs none in Q2 2023, and (3) 42% YoY growth in revenue from the power generation segment. Accordingly, substantial growth of gross profit and operating profit of 66%/63% YoY, respectively, overshadowed a nearly 10x increase in FX loss, all of which resulted in positive reported NPAT-MI of VND62bn in Q2 2024 (compared to a VND13bn loss in Q2 2023).
- H1 revenue and reported NPAT-MI were VND5.3tn (+77% YoY) and VND143bn vs break-even in H1 2023, completing 52%/27% of our respective fulll-year forecasts. We attribute the low completion of our bottom line forecast to (1) the lower-than-expected GPM of power construction with 8.0% in H1 2024 (vs 13.5% in H1 2023 and vs our full-year forecast of 9.0%), which is likely due to the lower profit margin from construction contracts with EVN, and (2) a higher-than-expected FX loss of VND143bn in H1 2024 (surpassing our full-year forecast of VND107bn) from USD-denominated debt, following the 5% YTD depreciation in the value of the VND against the USD.
- H1 Adjusted NPAT-MI (excluding FX loss) was VND257bn (+32.0x YoY), completing 41% of our full-year forecast, slightly trailed expectation as we expect PC1 will recognize more power construction revenue and will witness stronger hydropower performance in H2 vs H1.
- Overall, we see slight downside risk to our 2024F adjusted NPAT-MI forecast for PC1, pending a fuller review, following the lower-than-expected GPM of power construction.
- We currently have an OUTPERFORM rating for PC1 with a target price of VND32,400/share.
PC1’s H1 2024 results
VND bn | Q2 2023 | Q2 2024 | YoY | H1 2023 | H2 2024 | YoY | % of Vietcap’s 2024F |
Revenue | 1,472 | 3,091 | 110% | 2,977 | 5,256 | 77% | 52% |
Power construction* | 540 | 1,188 | 120% | 1,003 | 1,752 | 75% | 42% |
Electric steel pole manufacturing | 256 | 781 | 206% | 344 | 1,068 | 211% | 67% |
Power generation | 277 | 393 | 42% | 666 | 749 | 12% | 49% |
Real estate | 8 | 4 | -48% | 15 | 22 | 53% | 80% |
Nickel (57% stake) | 0 | 338 | N.M | 0 | 816 | N.M | 69% |
Nomura (70% stake) | 172 | 154 | -10% | 292 | 274 | -6% | 45% |
Others | 220 | 233 | 6% | 658 | 575 | -13% | 56% |
Gross profit | 283 | 469 | 66% | 590 | 907 | 54% | 46% |
Power construction* | 95 | 87 | -9% | 139 | 141 | 1% | 37% |
Electric steel pole manufacturing | 26 | 66 | 155% | 28 | 95 | 237% | 59% |
Power generation | 98 | 219 | 123% | 321 | 399 | 24% | 46% |
Real estate | 5 | 4 | -30% | 9 | 11 | 24% | 61% |
Nickel (57% stake) | 0 | 37 | N.M | 0 | 171 | N.M | 46% |
Nomura (70% stake) | 46 | 60 | 29% | 67 | 82 | 21% | 58% |
Others | 12 | -3 | N.M. | 25 | 9 | -65% | 25% |
SG&A expense | -84 | -145 | 73% | -151 | -250 | 65% | 55% |
Operating income | 199 | 324 | 63% | 439 | 658 | 50% | 43% |
Financial income | 30 | 50 | 69% | 95 | 94 | 0% | 82% |
Financial expense | -230 | -267 | 16% | -441 | -537 | 22% | 62% |
In which: Interest expense | -219 | -201 | -8% | -421 | -382 | -9% | 51% |
In which: FX loss & others | -6 | -60 | 937% | -7 | -143 | 1894% | 134% |
Income from JVs | -2 | -9 | 493% | 2 | 40 | 1671% | 37% |
Other income | 3 | -2 | N.M. | -11 | -2 | -78% | N.M. |
PBT | 0 | 95 | N.M. | 84 | 252 | 200% | 29% |
NPAT before MI | -21 | 75 | N.M. | 58 | 204 | 249% | 28% |
Minority interest | 8 | -12 | N.M. | -56 | -61 | 8% | 29% |
NPAT-MI | -13 | 62 | N.M. | 2 | 143 | 7143% | 27% |
NPAT-MI (adjusted) | -8 | 110 | N.M. | 8 | 257 | 3235% | 41% |
Source: PC1, Vietcap (* Power-related construction segment includes grid erection & installing activities and EPC contracts for renewable energy projects. ‘Others’ mainly includes low-margin machinery trading.)
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